How Apple's Corporate

Strategy Drove High Growth

1. A Ely
Problem:
- Value: It is the problem of Marketing Myopia; Apple focused heavily on the existing
market of sophisticated and creativity-inclined users to sell elegant, high margin
computers. On the other hand,Microsoft offered strong integration with complimentary
software applications such as Microsoft's Office suite and Exchange server and this is
where apple computers were losing the battle. (kalah bersaing dengan Microsoft dan Dell
dengan OS windows (karena harga mahal)
- Profit: the company lost US$2 billion in two years and its market share plummeted from
7.4% in 1995 to 3% in 1997, as did the stock price. Microsoft started dominating the market share by keeping low
prices and attracted an average PC user under the slogan "Windows Everywhere" and Apple products were niche and high margin, thus apple
products dropped drastically and market share was also falling down.

- People: 1985 power struggle between Steve Jobs and John Sculley, Jobs abruptly left the
company he had founded (ketergantungan dengan Steve Jobs), massive lay-offs of
employees. For the revival of Apple, Michael Spindler CEO in 1993 and Girlbert Amelio
CEO focused on massive lay-offs which hit the sentiments of employees, people and
consumers. Their confidence andbelief in the brand value decreased, hence the apple
instead of developing a legacy, developed a bad reputation.
 1.B ERRC
Eliminate
• Unprofitable Products and Projects
• Products with lower demand from customer side
Raise
• Mengembangkan produk sesuai kebutuhan customer  supaya penetrasi produk lebih diterima
Reduce
• COGS
• Volume of returned products
• Focus on market segments with high competition
• Difficulty in using interface
• Prices of products
Create
• competitive advantages by downsizing volume of PC
• differentiation and low-cost strategy
• Simple user interface to increase customer demand
• attracting a common user and going beyond tech-savvy people.
• More customer-centric product should be launched while simultaneously never lost focus on the core market and the flagship
product.
1. Reflecting on each offering of the iPod, iTunes music store, iPhone, and iPad, answer the following
questions:
a. In which industry did Apple create a blue ocean? Was that industry attractive?

• IPod:Sony ruled the music world with its ‘Walkman’ and retained 50% of market share in U.S. even after a decade after
its launch. But, the problems associated with this-size, inability to store music files. IPod, though a late entrant focused
on these key issues. It was lighter in weight and easier to carry. It has lot of storage space. By these value additions, it
disrupted the music industry altogether. It created and captured new demand and made a huge impact. This is a blue-
ocean strategy.
• ITunes:It offered a wide selection of copyrighted quality digital music for 99 cents per song.This was a very innovative
idea. It created and captured new demand. It did break the value-cost trade off and provided high value at low cost. The
whole idea of ITunes was aligned in pursuit of differentiation and low cost. This is clearly a blue ocean strategy.

• IPhone:It offered differentiation in terms of the sleek design, hardware and software quality and the applications it had
but it was a niche and expensive product. Even the phones were present in the market, so it did not create demand and
did not break the value-cost trade-off.

• IPad: It again offered differentiation in terms of the sleek design, hardware and software quality but it did not create
and capture new demand and could not break the value-cost trade-off.
2a Edi
2b. Was Apple a new entrant or an incumbent in the industry?
• IPod - It was not the first MP3 player. There were other players already there in the market such as Sony
Walkman. Sony Walkman was a portable cassette player but it didn’t affect the market the way iPod did. The
iPod 1 had a simple and efficient user interface when compared to Walkman. So, Apple was an incumbent in
industry for iPod.

• ITunes music Store: It was launched on April 28, 2003. It allows quick and easy access, purchase and then
downloading the music using internet. The industry had no other market leader at that time who provided a
service like this. So, iTunes was a new entrant in the industry for iTunes
• IPhone: Launched on June 29th, 2007, the iPhone was not the first smartphone to be introduced in the
market. It had competitors like Blackberry Pearl, Motorola K1, Nokia 6280, Palm Treo 680. So in case of
iPhone, Apple was an incumbent in industry as there were other market leaders also who already had their
smart phones in market.
• IPad: iPad is a lightweight device that browses through the Web and delivers media. There were other
netbooks similar to iPad which were already present in the market when the iPad was launched. So, Apple
was an incumbent leader in the industry for iPad.
3. Reflecting on each offering of the iPod, iTunes music store, iPhone, and iPad, answer the following
questions:
a. Where did the innovation come from? (technology/market/value) Akur

• IPod: It was innovated through technology. All the previous MP3 players were based on cassette system for example
Sony Walkman. Apple on inventing iPod brought a revolution in retail music business. With its shuffling feature, sleek
design and efficient user interface it captured the market through its advanced technology.

• ITunes music Store: This service was again an innovation from technology. It was launched on 28 April 2003. Apple
was the first in the league of online music stores. Before iTunes music industry was dependent on CDs.

• IPhone:Apple got the innovation for iPhone from value (walaupun banyak merk smartphone lain tetapi IOS dan
appstore membuat konsumen merasa lebih baik karena appstore mendukung aplikasi lebih banyak daripada
kompetitornya).

• IPad: The innovation for iPad came from Market. The Market already had netbooks from different companies like
Hewlett-Packard, Acer and Dell. The size and weight of an iPad fell between smart phones and laptops. It was capable of
handling the tasks which seemed possible only for Netbooks and notebooks at that time.
 3b. Did Apple focus on the existing core customers?
We can state that Apple did focus on Core Customers:

- Inovasi produk konsisten pada produk yang high technology untuk pasar high end customer (various product line)

- Distribusi channel (Apple store) and retail location (to provide excellent customer service)

- fokus ke layanan purna jual

- Appstore untuk memenuhi kebutuhan konsumen pada aplikasi2

- Update iOS secara regular untuk memenuhi kebutuhan konsumen

3c. Did Apple pursue either differentiation or
low cost? Or both?
• Apple pursue differentiation of product.
• For many customers, the Apple brand is unique and offers important, unique benefits over the competition, so
they're willing to pay those prices. The company employs a product differentiation strategy, or how unique
customers view goods and services.

• Apple CEO Tim Cook told Bloomberg Businessweek in an interview, “We never had an objective to sell a
low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured
out a way to do it at a lower cost.” Apple products have been significantly more expensive than a similar
phone, tablet, or computer.
 4. Reflecting on Sony’s struggle in 2011, suppose you are appointed as new CEO at Sony, succeeding Howard
Stringer:
a. How would you diagnose the problem of Sony in terms value, profit, and people? (Taufiq)

• Value – The problem in terms of value creation were:

• Sony was so focussed on its initial success of its products that they forgot an important aspect which influences business heavily –
Consumer behaviour. Consumers over the years have always wanted new features in their product. As a business, Sony lost its connect
with the market whose needs had changed over the years. Sony had stopped innovation in its product and even if it did, it was not aligned
to its market research. What it should have done is invest heavily in R&D. There was a serious marketing myopia in Sony wherein it could
not identify what were the marketing trends pointing to and how it had let down its leadership position.

• Profit– The problem in terms of profit creation was Sony’s net income dropped from US$1.5 by to US$851Mn in a span of 5 years. It hits
its lowest share price in 2011. This meant that its shareholders had waited for a long time for the company to turn thongs over. A primary
thing to look forward would be to find out why the declining net Income trend had not been looked into seriously.

• People – The problem in terms of people were At a juncture when Apple has eaten away heavily into Sony’s market share, which clearly
meant that Sony had not invested in its people. The leadership at Sony had not identified the problems of stagnancy in its various teams.
The problems which were thrown at the people were not challenging enough. People were averse to the idea of letting go off legacy
products(CDs and Walkman).
4. b. Using the four actions framework (E-R-R-C Grid) introduced
in Blue Ocean Strategy, what would you do to revive the company?
Eliminate
• Sony was a product oriented company suffering from marketing myopia.
• It needed to eliminate its fixation with CDs and Walkmans as the market rapidly changing.
Raise
• Sony required to raise its focus on innovation in alignment with market research.
• It required more focus on its non customers rather than existing customers while concentrating on R&D.
• Required to raise awareness on the declining net income and low share prices.
Reduce
• Sony required to reduce its focus from pushing its products into a highly evolving market
• It also required to reduce and minimise missing opportunities
Create
• Sony should have created a brand encompassing quality that would help customers show loyalty and thus help it
retain its market share
• It needed to create and be clear about its both long and short term goals and strategy.